In an interview with The Scotsman, the band's singer Alex Kapranos refused to name the company involved but said the deal was worth over £25m, a figure that takes into account the boost the Brit Award-winning band would have received in increased album sales.
"The advert meant we had to completely surrender all of our identity and integrity to this product that was being advertised," he told the paper.
"We just had to say no because of the gut reaction. It wasn't because we didn't want to sell more records. It was just because it didn't feel right."
The move puts the band in an exclusive group of music stars who refuse to hand over their music to advertisers for ideological reasons.
Recently The Thermals and Trans Am turned down deals worth $50,000 and $180,000 respectively to have their music used in advertising for US auto giant Hummer.
Trans Am member Phil Manley told the media shortly after turning down the deal that a key reason was his objection to the brand, which specialises in the type of 4x4 cars that in the UK have become known as "Chelsea Tractors".
But while the spirit of rock and roll may live on in the likes of Kapranos, others such as Oasis appear to be more than happy to link their songs with brands.
In February, Oasis signed a reported £550,000 deal with telecoms giant AT&T to use their track 'All Around the World' in a TV advertising push.
Ironically, the move came just weeks after Oasis's Noel Gallagher lambasted White Stripes frontman Jack White for writing a song for a Coca-Cola ad.
The AT&T advertising push in the US under the slogan, "your world, delivered", was created by its two agencies, GSD&M Advertising and Rodgers Townsend.
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